Part V--Product Devleopment

The first thing you should do when forming a marketing plan is
define the structure in which it will be presented. The structure
of the plan should allow the presentation of strategic information
in a logical and progressive manner. This structure should be
prepared in a written outline detailing the progression of topics
and how they will appear in the marketing plan.

The structure of a marketing plan will usually vary according to
the business, its product or service, and the objectives of the
marketing plan. Generally, however, each marketing plan will
include the following information:

As with the business plan, the purpose of the product
development section is just what the name implies: to detail the
development of the product or service. This requires placing that
development in the context of charting development goals, placing
timelines upon those goals, and associating costs with the
development of the product or service. Another portion of the
product development section that needs to be included defines the
expertise required in order to develop the product or service and
whether it is currently available on staff or you will need to
recruit the necessary human resources to produce the proposed
product or service.

The first thing you have to detail is the current status of the
product or service. Explain exactly what stage of development your
product or service is in. You may have a laboratory prototype of
the product or a rough idea of what equipment and materials will be
required for a service concept, but in terms of ironing out all the
"wrinkles," you've saved that until you acquire
adequate financing. In this event, the potential investor or lender
will want to know just how far along you are in the development of
the product or service concept.

After you have provided information regarding the current status
of the product or service, you need to detail the goals associated
with its development. When forming your goals, it's important
not to underestimate time lines, costs, and personnel requirements.
If you do, you are really hurting yourself because you may not
cover the expenses of production adequately. If you say you can
finish the development of a product in three months and it will
actually take closer to four months, that raises the costs beyond
what you've specified as your requirements, thus jeopardizing
the completion of your product.

The goals you set for product development must also meet the
technical as well as the marketing aspects of the
product, so there is a focused outline from which the development
team can work. We stress technical as well as marketing aspects
because as the product is developed, it has to be produced with an
eye toward marketability. If the product doesn't meet the needs
of the target group of customers and if it doesn't meet the key
strengths as defined in your competitive analysis, then there is no
sense in developing the product.

It is nice to set goals, but in order for them to work, there
has to be a certain level of expertise present within the company.
For instance, in order to create a biodegradable disposable diaper,
you have to have expertise in the realm of natural materials that
deteriorate with prolonged exposure to the sun. If that expertise
isn't present within the development team, the product may
never make it to market.

Your goals must also have a set of procedures attached to them
so there are schedules and personnel delegated to each task so the
goals can be completed by the specified deadlines. These procedures
are usually broad in nature but specific to the completion of the
product development goals.

Work assignments also need to be created. The work assignments
will break down the procedures into various tasks that need to be
completed in stages in order to achieve the goals outlined in this
section. The stages of each task usually include a completion date
for delivery of the preliminary product, a timeline for preliminary
product review and revision, and final delivery of the product.

Within the product development section, you should also produce
a development budget. When forming your development budget, you
need to take into account all the expenses required to develop the
product, from prototype to production. These costs usually
include:

*Material -- All raw materials used in the development of
the product.

*Direct labor -- All labor costs associated with the
development of the product.

*Overhead -- All overhead expenses required to operate
the business during the development phase such as taxes, rent,
phone, utilities, office supplies, etc.

*G&A costs -- The salaries of executive and
administrative personnel along with any other office support
functions.

*Marketing & sales -- The salaries of marketing
personnel required to develop pre-promotional materials and plan
the marketing campaign that should begin prior to delivery of the
product.

*Professional services -- Those costs associated with
consultation of outside experts such as accountants, lawyers, and
business consultants.

*Miscellaneouscosts -- Costs that are related to
product development

*Capital equipment -- To determine the capital
requirements for the development budget, you first have to
establish what type of equipment you will need, decide whether to
acquire the equipment or use outside contractors, and finally, if
you decide to acquire the equipment, whether you will lease or
purchase it.

The last element you need to discuss in the product development
section are risks involved in the development of the product or
service. Identifying these risks is important because it will help
you address these concerns. It will also show any potential
investors or lenders that you have thoroughly thought out the
development process and have already come up with a plan to solve
any problems that may occur.

The design and development effort of Softie Baby Care's
biodegradable diaper, Bio-Diaper, will include the development of
the product to final version for marketing, a distribution system
and sales promotion program to establish a solid customer base, and
recruitment of key organizational team members.

Product/Market Development

1.0 Development of biodegradable plastic

1.1 Research

1.2 Development of plastic biodegradable shell in three sizes:
small (up to 12 lbs.), medium (up to 24 lbs.), large (up to 36
lbs.)

1.3 Testing

1.4 Delivery

2.0 Pad development

2.1 Delineation of pad thickness and sizes for production of a
thin and thick pad in three sizes: small (up to 12 lbs.), medium
(up to 24 lbs.), large (up to 36 lbs.)

2.2 Delivery of raw material

2.3 Development of odor-reducing agent

2.4 Testing of pads for absorbency and odor reduction

2.5 Delivery of the specified pad sizes

2.6 Integration of pads into plastic shell for working
prototype

3.0 Package creation

3.1 Creation of imprint designs that will require the
recruitment of a marketing director who will oversee the
operation

3.2 Integration of imprint designs onto working prototype

3.3 Creation of shelf packaging that will include the design,
color scheme, and manufacture

4.0 Integration/Delivery

4.1 Component tests of shell, pad, and packaging

4.2 Product test of working prototype

4.3 Alpha test

4.4 Beta test

5.0 Manufacturing

5.1 Design modification as a result of alpha and beta tests

5.2 Pre-production run

5.3 Cost-reduction check to achieve pricing goal of $8.40 per
package

5.4 Manufacturing run

6.0 Final delivery

6.1 Distribution development that will include the recruitment
of a sales manager and sales force to obtain purchase orders from
five national distributors that service major supermarket and
drugstore chains, and enlist the aid of manufacturer's
representatives in the 10 major regional territories of the
U.S.

6.2 Delivery of initial orders to distributors and retailers

6.3 The implementation of the sales promotion campaign that is
budgeted at $15.3 million during the first year of operation and is
geared toward raising consumer awareness at the supermarket and
specialty-store levels.

The major benchmarks include:

A disposable plastic diaper shell that is biodegradable and
available in three sizes: small (up to 12 lbs.), medium (up to 24
lbs.), large (up to 36 lbs.)

Thin and thick pads available in three sizes to fit the plastic
shells. They must control odor effectively and be highly
absorbent.

Imprinted designs of favorite nursery characters using pastel
colors

Attractive pastel-colored package designs

Retail and distributor price points of $12 and $8.42 per
package

The development of Bio-Diapers will be spearheaded by the
following executives of Softie Baby Care:

Vice President of Production -- Roger Smith

Reporting directly to the CEO, Mr. Smith is responsible for the
management of the research and development arm of the company. Mr.
Smith has a strong background as a research and development
director in the realm of industrial plastics.

Vice President of Operations -- Steve Smith

Reporting directly to the CEO, Mr. Smith is responsible for
managing all purchasing and inventory-control operations. Mr. Smith
has considerable experience in purchasing and inventory control
operations for large manufacturers.

Risks

Since the development effort of Softie Baby Care is phased over
a period of time, the risks are very few and very controllable.
They include:

Product acceptance by consumers: Based on surveys commissioned
by Softie Baby Care, Inc., we feel consumer acceptance will be high
and present minimal risk.

Technical delays: With the expertise already present within the
principal owners of the company, this risk will be greatly
reduced.

Increased competition from major competitors: Most of the major
players are in the process of developing their own biodegradable
diapers. The risk of increased competition will be reduced through
superior product quality and consumer recognition of Bio-Diapers as
the first biodegradable diapers.

Financials

Item--Budgeted Amount

Materials--$7,133

Direct Labor--7,254

Overhead--9,992

G&A--1,088

Equipment--806

Miscellaneous--300

Total--$26,573

In part VI of our Marketing Plan series, we'll be
covering Operations. Tips are updated daily at 5:00a.m.
PST.